Without the Profit Motive, Other Motives Can Hardly Function
In point of fact, up to the present time, production and distribution on a large scale and embracing a sufficient variety of goods to satisfy consumers has nowhere been successful without the urge of the profit motive. Experience promises little more than occasional and temporary success for public ownership and control of the factors of production; and only a limited success has attended such methods of dispensing with profits as consumers' coöperative societies, productive associations of workers, agricultural productive societies, and such coöperative distributors as the Bon Marché in Paris. Such enterprises have failed mainly in management and discipline.
So far, it has been impossible for consumers to organize at all for the production of many commodities, since the consumers of these commodities are scattered all over the world and buy very irregularly. Moreover, as long as members of coöperative societies trade extensively outside their own stores, their freedom of choice is preserved by ordinary profit-seeking enterprisers. Their experiments, therefore, have not met one of the crucial tests, for freedom of choice, as we shall see presently, is an integral part of the economic problem.
Profits, it is true, are not the only incentives to productive activity: men do not work for bread alone. Various other motives -- some of them of a high order, that should be and can be gradually strengthened -- we are not overlooking. Certainly, they have a place in the industrial order that the early economists failed to give them. Senior's proposition that 'every man desires to obtain additional wealth with as little sacrifice as possible,' even though it is basic and almost literally true, is not the only fundamental fact. We do not agree with Senior that it is the ultimate proposition in political economy 'beyond which reasoning cannot go.' Reasoning must go much further if it is to take due account of all the mainsprings of the activities of men.
Nevertheless, we have no reason to suppose that all other economic motives put together can take the place of profits. The profit motive is not merely one among many: it is the one without which the others can hardly function. In the conduct of his business, a man may be actuated by many worthy aims: a desire to raise the wages of his employees, for example, or the ethics of the trade. He may wish to turn out a finer product or to reduce the selling price. He may want to make his factory an object of beauty, surrounded by playgrounds and gardens. He may say, 'I do not care about making money; I enjoy the game.' Or, he may say, 'I am in business for the service I can render, and I seek to apply the Golden Rule.' All these aims he may cherish and others just as admirable; but unless he subordinates them all, as far as need be, to the aim of making profits, his other ambitions are fruitless. He becomes a philosopher instead of a business man. He can still dream, but he cannot build. He may enjoy the game as much as ever, but he cannot play; he is retired to the side lines.
Moral sense is not a substitute for business sense. This point escapes many of the current critics of our profit economy. One of them commends a bookseller who 'spends much money trying to get people to read what he thinks are good books, announcing proudly that he is in business not to make money but to spread the habit of reading.' This is nonsense. If his first aim is to spread the habit of reading, he is not in business at all; he is in philanthropy. He can ignore profits for a while only because he or somebody else has realized profits in the past; and his career as a philanthropist can last only as long as his money lasts. It is odd that this critic and others who seek to abolish profits consider Henry Ford a benefactor of the human race. They seem to overlook the fact that Mr. Ford would be quite unknown today, and his humanitarian impulses quite fruitless, if he had failed to make profits. First of all, he had business sense.
It does not matter what a business man's views may be concerning a 'fair wage,' or a 'living wage,' or a 'saving wage.' It does not matter what he may think about the nobility of the profit motive; his opinions are beside the point. He is obliged to make profits his first aim -not his highest aim, not his ultimate aim, not his most cherished aim, but his first aim -- for unless he does so, he is in danger of eliminating himself from the business world. He can give away all that he has; but after that he can no longer pay a living wage or any other kind of a wage. That is why the Brotherhood of Locomotive Engineers, in the operation of its coal mines, disregards the principle sometimes expounded in Congress that certain wages should be paid by railroads whether the roads earn expenses or not, and proceeds to pay its coal miners whatever wages the condition of the business seems to warrant. For a short time, it is true, a business can continue operations on the mere prospect of profits; but presently profits must be realized or the business must stop. The wisp of hay held out before the donkey will keep him moving for a while, but only for a while; unless he gets something more nourishing than prospects, he drops dead. In short, the business man who seeks to improve industrial society must not, in his altruistic eagerness, overlook the primary essential; for it is only a successful business man -- a profit-making man -- who can pursue his ideals with practical results in the actual world.
For its own good, therefore, society should expect the individual business man to act from enlightened selfinterest. Whatever restrictions upon his freedom in so acting are sure to conduce to the public welfare should be binding, legally, upon all enterprisers. Except among business men, this matter is not generally understood. Often a man is told that, irrespective of what his competitors do, he should adopt such and such a policy, not for the good of his business, but for the public good. He is called upon to raise wages, reduce prices, shorten the working day, continue production regardless of demand, and so on, solely for humanitarian reasons. But in a money and profit economy, such measures often redound, not to the benefit of the public, but chiefly to the benefit of those competitors who refuse to adopt them; and it does not help matters for those employers who have the highest humanitarian impulses to neglect profits, thereby putting themselves out of business.
 More Readings |
